All eyes at the moment are on the USD. Many traders believe that we could see a substantial USD correction if there is a delay in QE from the US. It would appear that QE had already been priced in to the market, so any alteration in rhetoric from Bernanke and we could see the market reel backwards. Hans-Guenter Redeker, global head of currency research in London at BNP Paribas states “Everybody sits in the same boat and is heavily negative the dollar. When too many people are sitting in a boat it’s no longer safe.”

Strategists argue that there is no need for drastic measures, although the US wants to help its economic recovery get underway, the agressive shock and awe approach might not be the best one.

The Euro has lost ground today against the USD and GBP. This could however be temporary reprieve before anoother bull move. Tomorrow sees a host of data from the UK and Germany. We have key retail sales and house price data out in the morning, both of which should help signal whether a iminent double dip recession could be upon us. The fear in the market of a return into negative economic growth is obvious, with threats of more QE from the BoE and upcoming austerity measures announced on the 20th Oct 2010.

Support and Resistance

GBP/USD – Support 1.5670 / Resistance 1.6018
GBP/EUR – Support 1.1296 / Resistance 1.2015

UK Economic Releases

UK – BRC Retail Sales 0001
UK DCLG – House Prices 0001
GER – CPI Final (September)0700
GER – Wholesale prices 0700
UK – Trade Balance
US – FOMC Minutes from 21st Sep meeting

Luke Zorab
Torfx Currency Dealer
(01736) 335285